Harrow Health(HROW) - 2024 Q4 - Annual Report

Financial Performance - Total revenues for the year ended December 31, 2024, were $199,614,000, an increase of $69,421,000 (53.4%) compared to $130,193,000 in 2023[271] - IHEEZO net sales reached $49,303,000 in 2024, up $28,682,000 (138.9%) from $20,621,000 in 2023[271] - VEVYE net sales increased significantly to $28,061,000 in 2024, compared to $1,766,000 in 2023, representing a growth of $26,295,000[271] - Gross profit for branded products was $94,448,000 in 2024, a $56,852,000 (151.1%) increase from $37,596,000 in 2023, with a gross margin of 81.3%[275] - The net loss for the year ended December 31, 2024, was $(17,481,000), compared to a net loss of $(24,411,000) in 2023, resulting in a net loss per share of $(0.49) in 2024 versus $(0.75) in 2023[287] Expenses - Selling, general and administrative expenses rose to $129,064,000 in 2024, an increase of $45,974,000 (55.4%) from $83,090,000 in 2023, primarily due to new hires and the launch of VEVYE[278] - Research and development (R&D) expenses increased to $12,230,000 in 2024 from $6,652,000 in 2023, a variance of $5,578,000, primarily due to an expanded branded product portfolio and one-time costs related to TRIESENCE[280] - Interest expense increased to $22,786,000 in 2024 from $21,324,000 in 2023, primarily due to an increase in the principal balance of loans[282] Cash Flow - Cash on hand decreased to $47,247,000 at December 31, 2024, from $74,085,000 at December 31, 2023[288] - Net cash used in operating activities was $(22,202,000) in 2024, a significant decrease from cash provided of $3,840,000 in 2023, attributed to increased accounts receivable from branded product sales[292] - Net cash used in investing activities was $33,164,000 in 2024, primarily due to a milestone payment of $37,000,000 related to TRIESENCE, offset by cash received from the sale of Eton for $5,510,000[293] - Net cash provided by financing activities was $28,528,000 in 2024, mainly from additional borrowings under the long-term debt facility with Oaktree[294] Strategic Initiatives - The company initiated a patient access program called VEVYE Access for All in March 2025, aimed at reducing out-of-pocket costs for patients[259] - Project Beagle was launched to transition approximately 25,000 ImprimisRx patients from compounded formulations to FDA-approved products, with plans to discontinue Klarity-C by June 30, 2025[260] - In October 2024, the company made a one-time payment of $37,000,000 to Novartis for the re-launch of TRIESENCE, which received temporary pass-through reimbursement status effective April 1, 2025[263] - A license and supply agreement was established with Apotex in February 2024, granting exclusive rights for several products in the Canadian market, including VEVYE and IHEEZO[266] - The company successfully increased the Medically Unlikely Edits (MUE) for IHEEZO's J-Code from 1 to 2, effective July 1, 2024, allowing for more efficient billing in bilateral ocular procedures[268] Impairments and Losses - The company recognized an impairment loss of $253,000 related to intellectual property in 2024, compared to a charge of $548,000 in 2023[281] - The company recorded a loss of $(3,171,000) from the change in fair market value of Eton's common stock in 2024, compared to a gain of $3,092,000 in 2023[283] - The company recorded an impairment charge of $253,000 and $380,000 in 2024 and 2023, respectively, related to certain licenses, trademarks, and patents[324] Tax and Revenue Recognition - As of December 31, 2024 and 2023, there were $2,858,000 and $2,822,000 of unrecognized tax benefits, respectively, affecting the effective tax rate[318] - The company recognizes revenue upon transfer of control of a product to a customer, typically at shipment[305] - The government rebate reserve includes estimated payments due to Medicaid and Medicare, with Medicaid rebates billed within 60-90 days after product dispensing[308] - The company participates in the Coverage Gap Discount Program for Medicare Part D beneficiaries, requiring rebates for products sold under NDAs[308] - The company allocates transaction prices to performance obligations, but no allocation is necessary as there is only one performance obligation for product sales[305] Other Financial Information - The company has no off-balance sheet arrangements, including structured finance or special purpose entities[326] - The estimated fair value of stock-based compensation is determined at the date of grant using the Black-Scholes-Merton option pricing model and Monte Carlo simulation[325] - The company continually monitors government rebate reserves and adjusts estimates based on actual claims data[309] - The returns policy allows customers to return products within six months prior to and up to one year after the expiration date[310] - The company plans to refinance the Oaktree Loan, which has a principal amount of $107,500,000 due in January 2026, and is exploring asset sales as a potential strategy[295]